Tech Spend Rebound and AI-Driven Personalisation Drive Revenue Growth for Publicis

Tim Cross 11 April, 2024 

French agency group Publicis Groupe reported its financial results for Q1 this morning, the first of the large holding groups to do so, posting another solid quarter of 5.3 percent organic revenue growth. There were promising signs for the industry as a whole as Publicis saw healthy growth across all markets, and saw a rebound in revenues coming from tech clients – though Publicis has consistently performed better than its competitors in recent quarters, meaning others won’t necessarily see the same trends.

North America, Publicis’ largest market by a large margin, accounting for almost two thirds of its business, saw organic growth of 4.8 percent. Europe meanwhile delivered 6.1 percent growth, and Asia Pacific saw 6.2 percent growth. And generally across markets, media and data were major growth drivers, with Publicis Media and data unit Epsilon combined delivering double digit growth.

Green shoots in tech, but will others benefit?

One particularly significant figure as far as the wider industry is concerned was growth in revenues from tech clients.

All of the major agency groups reported last year that tech clients were spending more cautiously than usual, resulting in a dip in overall tech revenues. This affected some more than others – IPG and S4 Capital both posted full year falls in organic revenues, citing reduced tech spend as a major factor.

In Q1, Publicis saw “a clear rebound in the tech sector” according to CEO Arthur Sadoun, with double digit growth year-on-year. Publicis’ TMT (tech, media, and telco) revenues, which were down last year, were up 11 percent in Q1. And the five biggest growers within that segment were all tech clients.

However both Sadoun and Publicis’ CFO Loris Nold attributed this growth more to market share gains than anything else – with Nold specifically pointing to scope increases from clients (which may have come at the expense of other agencies). So while it was good news for Publicis on the tech front, others won’t necessarily have seen the same trends. And even within Publicis, Sadoun cautioned that it’s too early to say how the rest of the year will be.

Gen AI delivering revenues

Another takeaway from the earnings call was that generative AI – a major area of investment across the holding groups – is delivering meaningful revenue growth for the French business. Specifically, Sadoun said applications based on delivering personalisation at scale are making significant contributions to Publicis’ top line.

“Clients are realising that they not only have to move away from third-party cookies because of Google, but that AI can help them actually accelerate,” he said. “And it’s true that the offer we’ve got has accelerated that and had an impact on Q1, particularly on new business.”

The company says it has made good progress on deployment of Core AI, its project announced at the start of the year to deploy an AI layer accessible across the whole company designed to get the most out of Publicis’ data.

Sadoun mentioned a few projects Publicis has already run with clients enabled by Core AI. “If you look at what we do on auto, for example, we are starting to build rich customer profiles that can actually predict the next purchasing moment,” he said. “And when you know that happens every three or four years, our ability to choose, thanks to AI, the next best action to reach the new prospect is something that is super exciting.” He also mentioned work with CPG clients which connects shop inventory to audience behaviour, and projects with pharma clients which use AI to ensure compliance with regulation.

“What is great about AI is not so much efficiency,” said Sadoun. “What we’re looking for the most is to be able to do things tomorrow that we can’t do today”.

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2024-04-11T12:37:00+01:00

About the Author:

Tim Cross is Assistant Editor at VideoWeek.
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